UK: Could the Government's New Deal be a raw one?

UK: Could the Government's New Deal be a raw one? - Feelings are mixed about the new back-to-work project.

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Published: 01 Sep 1997

Last Updated: 31 Aug 2010

Feelings are mixed about the new back-to-work project.

The Government's New Deal for young people and long-term unemployed adults is part of its Welfare to Work programme. The £3.5 billion scheme, funded by the windfall tax on the privatised utilities, aims to get more than 250,000 people into work, education or training over the next four years.

Under the New Deal, employers will be offered a subsidy of £60 a week for up to 26 weeks and £750 towards training costs for each young person they take on who is aged 18-24 and on the Jobseeker's Allowance. The scheme will be piloted in January 1998 and introduced in April of that year.

Employers will also be given a subsidy of £75 a week for 26 weeks to take on adults aged 25 and over who have been unemployed for two years and more. The scheme will start in June 1998.

The initiative has been welcomed although many are worried about its efficacy. The Employment Policy Institute (EPI) warns of the inevitability of substitution practices, with employers taking on subsidised workers where they would have taken on people anyway and also substituting subsidised workers for existing employees. It is not clear how such a practice would be penalised says the EPI. The best stab for Nick Isles, the director of development, is that, 'We need the Department for Education and Employment to work closely with individuals and employers throughout the six months.' It is a theme taken up with gusto by Adrian Ladd, managing director of Format shop-fitting, which has 37 employees and is based in Worthing, Sussex: 'It's just a gimmick to reduce the numbers (of unemployed) in the short term. Firms will jump on it just for the money without offering proper training and long-term prospects in return. The Government should give firms a proper incentive, such as tax breaks, to train recruits and achieve an end result. That would raise skill levels and genuinely reduce the numbers of unemployed.'

Stephen Phillips, managing director of Hygicare, an industrial clothing and leisure wear company that employs 40 people, likes the idea in theory: 'Provided the scheme is not hedged around with vast amounts of bureaucracy, it sounds a good idea.' The financial incentive is needed, he says, because you have to admit to a certain reluctance when you look at the long-term unemployed: 'You ask yourself: "Do they really want a job?"' In spite of his nominal support, however, he admits that 'the scheme would swing me away from employing people who don't fall under the New Deal category - it won't increase the overall number of people I want to employ'.

Most companies are prepared to at least consider taking on unskilled individuals. Jim Johnson, spokesperson for British Steel, says, 'The company is wholeheartedly behind the scheme and is actively considering what it can do to help.' But few companies are specific about what 'actively considering' really means. ICL is more forthcoming: 'Finding people with the requisite IT skills is becoming difficult, so we in any case have to bring in young people and train them up,' says Yvette Coulthard, head of group resourcing at ICL. The company will participate, she says: '... so long as we could interview them and assess that they have the potential we need'.